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#18397
EQUITABLE CONDO LIEN rejected in creditor v creditor round #1 TREZ v WYNFORD 2015/12/29 14:41  
Round # 1 - a ‘creditor v creditor’ contest under under section 243 of Canada's B.I.A. Bankruptcy & Insolvency Act RSC 1985 ch B-3 - is lost by North Toronto commercial condo corporation M.T.C.C. # 1037.

M.T.C.C. # 1037 sought to “equitably” resurrect ( for the same debtors’ unliened historical arrears now claimed at $1.285 M ) a Condominium Act 1998 section 85 super-priority lien status.

This is a creditor v creditor battle, not a Khan-style management looting using bogus borrowing by-laws. Aside from issues of possible fraud & misrepresentation against lenders, central to the condo aspect is a pursuit of distinct private interest by a Board majority to the unlawful detriment of the M.T.C.C. #1037's interests.

It further includes at least one flat-out unlawful declaration within a Status Certificate to induce the loans, a consequence of which further subordinates the condo arrears to the lenders' rights.

Had the condo corporation prevailed in this round, the unliened historical units arrears would queue-jump for the condo corporation ahead of registered mortgages initially totalling almost $10 M. The loans are registered as security against titles to multiple units owned by a defaulting investment group ( the Waltons group ).

Factuals :

Central to each claim is the disturbing role of ousted M.T.C.C. # 1037 ex-condo President & ex-Board Chair, lawyer / realtor Norma Jean Walton.

For only indirectly related matters, she was ordered disbarred by a Law Society Tribunal on Feb 18 2015 http://canlii.ca/t/ggdfl

Her multi unit-owning) borrower Walton group – having gained condo Board majority control & Presidency - switched to more pliable management that did not super-lien the dominating Waltons’ huge current condo arrears.

Her group's (concealed) arrears totalled $ 811 K at date of the March 2013 loan.

As part of lenders' prior diligence TREZ reviewed concurrent Status Certificates signed by condo president Walton herself ! Remember the property management change ?

Those Certificates illegally & falsely failed to disclose in section 5 the Walton portfolio’s common expense arrears at Certification date, a legislated absolute requirement.

The March 2013 Certificates further contained outdated 2 year old financials for 2010 but for no later periods. Walton units were not in arrears in 2010. Now what questions should there have been about financials for the subsequent 2 complete financial years ? ? Did the wordings of these Certificates purport illegally to present a snapshot of Dec 31 2010 ?

The thereafter-approved TREZ loan of $9.85 M to the Waltons, was secured by registration.

However within a year the scenario unravelled, a court-ordered condo Owners Meeting ousted the Waltons’ Board, and current common expense payments were resumed. Historical arrears are unpaid.

Creditor v Creditor Round # 1 however pits the prior registered lender TREZ et al against the condo corporation’s unliened claims to past condos’ arrears now accrued to $1.285M.

Parallel claims are underway with more to come. ( But issues such as : The condo corporation's claim to the historical arrears is otherwise intact, but because un-liened has lost super-priority unless successfully appealed. Without direct theft, is the condo corporation's loss of super-priority addressed by Directoral, Fidelity or other types of insurance ? Presumably not acting in the practice of law as condo President, how could or should Norma Jean Walton trigger law society professional coverage ? At the end of the day, what Walton assets will remain to be targetted by civil claims etc ? . .)

Summary : The registered lenders TREZ et al here survive an attempt by the condo corporation to talk the courts into "equitably resurrecting" the super-priority that Lien section 85 WOULD HAVE given to the condo corporation had the Walton group’s illegally concealed arrears been properly liened.

Minority Directors on the ousted Walton-dominated Board are chastised.

Trez v Wynford 2015 ONSC 2794 issued Dec 10 2015 http://canlii.ca/t/gmh2d


ADDENDUM March 9 2016 This is now subject of Gowlings LLP article by lawyer Jocelyn Duquette http://condoadviser.ca/2016/03/condo-loses-1-3m-with-directors-failing-to-pay-their-condo-fees-and- falsifying-the-status-certificate/condo-law-blog-Ontario
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#18458
Jim Davidson : bleak recovery options after liens deliberately missed : TREZ v WYNFORD 2016/06/14 18:24  
1- Bleak recovery options may be left after lien outrageously trumped by debtor Directors. These are discussed by well respected Ottawa condo lawyer Jim Davidson :
June 14 2016 J Davidson LLB ( Nelligan IO'Btrien payne http://www.condolawnews.ca/e/another-interesting-court-decision-about-condominium-collections.cfm

Not easy to pursue Directors personally, including the issue "which Directors ?"

2 Not here: At HOATalk.com I & other amateurs kick around Derivative Remedy - a corporate veil-piercing shareholder remedy to pursue individual Directors. A Washington state questioner wants to pursue what he describes as 'idiot' Directors who he rages have run his HOA into the ground after he left the Board years ago . . . Doesn't look easy. ( Caution : Neither legal advice nor of Canadian application )

"(Washington state) case study in condo gone wrong"
http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/214777/view/topic/Default.aspx
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#18738
Disbarment upheld : ex condo President Norma Jean Walton 2017/07/12 19:02  
1- June 28/17 Divisional Court upholds disbarment appealed by former condo President.

The disbarment grounds are a range of actions sadly consistent with her outrageous misconduct as then-President in concealing ( from lender/investors ) her own assets' arrears contrary to her duty as Status Certifier . . .

Walton v Law Society of Upper Canada, 2017 ONSC 3847
http://canlii.ca/t/h4jjv

2 - What happens within organizations injured BIG TIME - by misgovernance or even by illegal misconduct in the above events - which eventually cost the stakeholders & other creditors BIG TIME ?

For example, a timely question - albeit NOT about dishonesty nor clear misconduct - for the stakeholders of Toronto's Wychwood Park Trust to start considering . . . .

Ontario's Court of Appeal has recently ruled that the Wychwood Park Trustees' basis for a NINE year litigation to seek annual voodoo fees from owners of an OFFSITE home, was in flat out contravention of the MOST BASIC real property covenant law !

The Wychwood Park Trustees' claim to contribution against their target was pursued for almost a decade in flat-out defiance of current period Appeal Court decisions and of a + 130 year old foundation of Building Scheme covenant interpretation.

Maybe worse : on dubious grounds decades of Building Scheme collections have been made against many property owners. Now will the whole Building Scheme collapse ?
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